Economy, Currency and Banking
centimos, Banco Central, national banking system, domestic banks, banking crisis
The basic unit of currency is the bolivar, consisting of 100 centimos (680 bolivars equal U.S.$1; 2000 average). The Banco Central de Venezuela, founded in 1940, is the government banking agent, the sole bank of issue, and the clearinghouse for commercial banks. The country’s principal stock exchange is in Caracas.
In 1994 the government assumed control of 13 banks, including some of the largest institutions in the country, in a banking crisis precipitated by the collapse of Banco Latino, Venezuela’s second largest bank. The bank, which had enjoyed loose government supervision, failed due to poor credit decisions and possible corruption. This failure spurred a loss of confidence in other domestic banks, and government attempts to rescue the national banking system cost an estimated one-half of the annual budget. By early 1995 the government had provided financial assistance to more than half the country’s commercial banks. Sixteen banks were nationalized or forced to shut down. In an attempt to recover some of the costs of the bailout, Venezuela sold three of the largest banks to foreign investors in December 1996.
Article key phrases: